Rental yields in England show 0.3% annual fall

The second quarter of the year saw 5.3% rental yields on residential buy-to-let (BTL) properties across England, easing down from the 5.6% recorded in the second quarter of 2019, new data from Fleet Mortgages has revealed.

The North-West of England posted the top rental yield regional figure for the quarter, up 0.6% year-on-year to 7.6%, while the East Midlands posted the biggest year-on-year fall of 2.1% down to a 4.4% yield from 6.5% last year.

Fleet revealed the figures in the second iteration of its BTL Rental Barometer covering rental yields across England in the second quarter.

The BTL lender’s first version of its Barometer, which covered Q4 2019 in comparison to Q4 2018, had shown that the North-West was the only region with a drop in rental yield over the period. This time, however, Fleet said there has been over 1% falls in the North, Yorkshire & Humberside, and East Midlands, with smaller falls posted in the South-West, East Anglia and Greater London.
The data indicated that the three regions to post positive rental yields over the period are the North-West, West Midlands and the South-East, while the lender added that the overall data represented “softer” rental yields across England, but with little signs of immediate falls.
Fleet distribution director, Steve Cox, commented: “The economic backdrop may appear somewhat bleak at present, but this might change quickly depending on the type of recovery we get, and certainly at the moment our latest figures do not suggest sharp falls in rental yield.

“This may well be as a result of pent-up demand and more households being formed as a result of the lockdown, but it’s clear that more data will be required and it will be interesting to see whether this trend will be maintained into the rest of the year.
“Clearly, we will need to take into account the tailing-off of the furlough scheme and how this impacts on the level of unemployment in the country, the ability of existing tenants to keep paying their rent, and the re-introduction of evictions and repossessions at the end of the year, to get a clearer picture of where rents and yields are heading.
“What we do know, as a result of our experience through the Credit Crunch and the recession that followed, is rents are not as susceptible to these economic hits as property prices. Occupants are much more likely to opt for shorter-term financial commitments offered by renting in such circumstances, rather than move to longer-term property ownership.”

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